Earlier today, U.S. stocks were soaring, buoyed by the anticipation of a significant corporate tax cut gaining traction in Congress. The optimism was palpable; however, the tides have since shifted, leaving the Nasdaq and S&P 500 treading water.
There’s speculation that this reversal could be linked to jitters around Nvidia’s earnings, yet that’s a tough sell given Nvidia’s shares have actually climbed 2.6% today. The real pivot seemed to occur following President Trump’s cabinet press conference.
Josh Wingrove of Bloomberg offers a take on the situation, highlighting the ambiguity surrounding Trump’s tariff statements. According to Wingrove, Trump announced plans for a 25% tariff on the EU, though the focus appeared to shift towards sector-specific tariffs on automobiles. He also hinted that the impending tariffs on Canada and Mexico, supposed to kick in next week, might be deferred and included in a larger action planned for April 2. Yet, Trump seemed to backtrack, expressing skepticism about extending the deadline, leading markets to perceive a delay was likely.
Overall, while Trump’s comments contained pockets of positive news, the unpredictability of it all is starting to wear thin on the market’s patience.
The bond market, in particular, seems fatigued by this uncertainty. Rate cut projections have ramped up from 40 to 57 basis points over the last two weeks. The likelihood of a rate cut in June has climbed dramatically, with the probability now at 83%, up from 45% just a week earlier. Despite the noise, there remains a robust demand for Treasury bonds, evident across this week’s auctions.
